Should You Reconsider Autoliv After Its 38.7% Share Price Surge in 2025?

If you are wrestling with the question of what to do next with Autoliv stock, you are not alone. The past couple years have been a remarkable journey for the company and its shareholders, and momentum shows no signs of cooling. Just think, Autoliv's share price has surged by an impressive 38.7% since the start of this year, and it's up 40.5% from a year ago. Stretch that window to the past three years, and you are looking at an eye-popping 90.5% return. Even over the last month and week alone, the stock is up 2.8% and 2.3%, respectively.

This upward trend reflects renewed optimism about the auto industry’s massive transformation and Autoliv’s growing relevance in global safety systems. As volatility and uncertainty have rocked broader markets, investors appear to be recalibrating their risk perception and growth expectations for companies like Autoliv that sit at the crossroads of innovation and necessity.

But here is where things get truly interesting: despite these solid returns, Autoliv clocks a value score of 3 out of 6. That means the company is undervalued in half of the valuation checks commonly used by analysts. For investors, that is a number worth understanding in detail, since it can point to overlooked potential or mispriced risk.

So how should you really assess whether Autoliv is the right buy or hold for your portfolio? Let’s take a look at the major valuation approaches, and later, consider why there might be an even more insightful way to put a value on what this company brings to the market.

Autoliv delivered 40.5% returns over the last year. See how this stacks up to the rest of the Auto Components industry.

Approach 1: Autoliv Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) method estimates a company's value by projecting its future cash flows and discounting them back to today's dollars. This approach aims to capture the true, underlying worth of the business based on its power to generate cash over time.

For Autoliv, the latest reported Free Cash Flow (FCF) sits at $374.4 million. Analyst projections see this figure steadily increasing over the next several years. By 2028, forecasts expect FCF to reach $652.5 million, and long-term projections estimate it will continue to edge higher over the following decade, though at a slightly declining growth rate as the company matures. All cash flows are measured in US dollars.

Taking these estimates into account, the DCF model places Autoliv’s intrinsic value at $134.86 per share. This suggests the stock is trading at a 5.1% discount relative to its fair value. In other words, the market price and the calculated value are closely aligned.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Autoliv.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Autoliv's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Autoliv Price vs Earnings

For companies like Autoliv with steady profits, the price-to-earnings (PE) ratio is a tried-and-true tool for stock valuation. It distills what investors are willing to pay for each dollar of current earnings, making it especially relevant for established, profitable firms.

How high or low a "normal" or "fair" PE should be depends a lot on the company’s expected earnings growth, perceived risk, and the trends within its sector. Fast growers or highly stable businesses often command higher PE ratios, while slower, riskier, or more cyclical peers come in lower.

Autoliv currently trades at a PE of 13.8x, which is below both the Auto Components industry average of 18.9x and its main peer group at 28.1x. At first glance, this hints at a potential bargain, but headline comparisons do not always provide the full picture.

That is where the Simply Wall St "Fair Ratio" comes in. Calculated specifically for Autoliv, this metric blends not just growth outlook, but also profit margins, risk profile, company size and its place in the industry. In this case, Autoliv’s Fair Ratio stands at 12.2x. This is just a shade below its current multiple, suggesting the market is valuing Autoliv about in line with what you would expect given all the known factors, not just peer averages.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Autoliv Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story or perspective about a company, connecting the numbers, such as fair value, future revenue, earnings and margins forecasts, to what you believe about its future and why.

Think of a Narrative as a bridge between a company’s real-world potential and the financial forecasts behind its share price. Instead of fixating on a static set of numbers or single valuation output, Narratives help you articulate your view (“I believe Autoliv’s growth will accelerate as safety regulations tighten and new technologies gain traction in emerging markets”) and see how that ties directly into fair value estimates.

This approach is available for everyone on Simply Wall St’s Community page, making it easy and accessible for millions of investors to participate. Narratives let you quickly sense-check your assumptions, compare your Fair Value to the current market price, and decide whether now might be a buy, hold, or sell. This gives you the flexibility to instantly update your story as news or earnings reports roll in.

For example, different investors using Narratives for Autoliv right now see a fair value range from $106.0 to $145.0 per share, reflecting differing views on the impact of Chinese partnerships, industry regulation and cost management. You can compare your conviction against those of other investors, in real time.

Do you think there's more to the story for Autoliv? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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